Tech giant Amazon’s $7.5b NZ data centre plan quietly put on hold

Two-and-a-half years ago, Newsroom revealed Amazon was bailing on its plan to shoot its $1.5 billion Lord of the Rings TV series in NZ.

Now, we can report that its even bigger plans to spend $7.5b building data centres around Auckland have been quietly put on hold – though the company isn’t admitting it.

In 2021, with great fanfare, Amazon Web Services had promised customers it would open a so-called “region” of three large, interlinked data centres in 2024. These would ensure sensitive government and corporate data was kept safe in New Zealand. Customers spoke excitedly about “data sovereignty” and “the digital transformation of our country”. 

But only one consent application to build a data centre is known to have been filed with Auckland Council; contractors were permitted last year to start on geotechnical tests and clearing a small wetland, home to nesting dabchicks.

Amazon refuses to answer questions about the project – questions that Newsroom has been posing ever since confirming that firefighters were called to a fire at Amazon’s undisclosed west Auckland construction site on January 31.

The company’s Auckland public relations spokesperson Pam Wong says in an email: “We are committed to launching an AWS Region in New Zealand to support growing demand from customers.

“Our NZ$7.5 billion investment in world-leading cloud infrastructure will democratise access to technologies such as AI and act as a catalyst to accelerate innovation, drive productivity, fuel economic growth, and level the playing field for New Zealand organisations. We are not able to share details about the construction or location as this is part of our secure design approach.”

Newsroom repeatedly sought explanation as to why there was no construction work underway, and confirmation that there was no prospect of the data centres being built and opened this year as Amazon had promised its customers. Repeatedly, Wong refused to answer.

“As said, we are launching an AWS Region. Can’t be clearer than that. Unfortunately I can’t share more details at this stage for reasons already discussed. I’ll update you if that changes.”   

But despite Amazon’s evasiveness, Auckland Council has confirmed the location of the sole data centre for which the company is known to have sought consent.

The council says Amazon hasn’t resolved stormwater discharge problems, and accordingly, the consent application process has been put on hold.

Newsroom has been supplied copies of the Project Wēta plans: the Assessment of Effects on the Environment, the Civil Engineering Design Assessment Report, and the architectural drawings for the proposed concrete behemoth in west Auckland.

When Amazon first announced that it planned to build data centres in New Zealand, its public relations company lined up a long list of customers – businesses and government agencies – to sing its praises.

These included government agencies like the Ministry of Justice, big corporates like Air New Zealand and ANZ Bank, and export brands like internet health provider The Clinician and online tutoring brand Education Perfect.

“As a born-and-bred Kiwi business, having our technology partners make significant local investments helps us build trust with government and education stakeholders, knowing that we’re collaborating with an organisation that values security, economic success, and the digital transformation of our country,” said Education Perfect’s former chief executive Alex Burke, at the time.

The Clinician co-founder Tamaryn Hankinson added: “An AWS Region in New Zealand will enable the expansion of our digital health services across the private and public health sector locally, ensuring we respect the data sovereignty needs of all communities.”

The Justice Ministry and Department of Internal Affairs signed up whole-of-government deals with Amazon Web Services. “By investing in a Region in New Zealand, AWS is opening up fresh possibilities for public service agencies like ours by offering a new cloud computing option aligned with our preferences for on-shore data hosting,” said deputy secretary of justice Tina Wakefield.

Now, there’s muted concern about whether – or when – Amazon can follow through on its promises to build the local data centres and repatriate sensitive New Zealand data home from where it’s currently kept, at data centres in the US and Australia.

Again, Amazon refused to answer questions about its contractual obligations to New Zealand customers.

But Catalyst chief executive Don Christie says without a timetable to open the data centres, he questions whether the New Zealand Government and other customers can trust Amazon’s assurances.

Catalyst has a subsidiary that operates three New Zealand data centres, in competition with Amazon.

Christie was upset that former prime minister Jacinda Ardern met with global cloud providers Amazon and Microsoft, and supported their expansion in New Zealand, but hadn’t support local data centre operators like Catalyst Cloud.

“We couldn’t get prime ministerial endorsement for our capabilities or for New Zealand companies, even though we tried. We couldn’t even serve them a cup of tea.”

The “cloud” is generic branding for a more grounded reality. Tech companies are building big data centres around the world that impose enormous demands on communities’ scarce electricity and water resources.

Amazon Web Services, which opened its virtual doors in 2006, is the biggest of the bunch. (It still doesn’t like to open its physical doors; it’s a deeply secretive company that refuses to even disclose the location of its 105 data centres on specious “security” grounds).

That secrecy has proved contentious, around the world. “Data centres have always suffered from this bogus secrecy,” writes Peter Judge, the global editor at DatacenterDynamics. “Amazon insists it can’t say where these data centres are for security reasons. I think it’s also marketing: keeping the exact locations private helps to promote the idea of a dematerialised cloud.”

But when it comes to the crunch, it’s been unable to hide them. For instance, a fire broke out in the roof of a data centre in Ashburn, Virginia. It would hardly have been practical to hide the building’s identity from the local fire service, and so that data centre’s whereabouts became publicly known.

So too in New Zealand, where Fire & Emergency confirmed details of the small fire, and Auckland Council issued Newsroom with details of the consent applications – despite Amazon’s insistence they be kept confidential.

The plans and reports disclose the scale of the company’s stormwater and coolant water discharge challenge at the proposed facility.

Cognisant of the concerns about its water usage, AWS has announced its worldwide operations will be “water positive” by 2030, returning more water to communities than it uses in its direct operations.

But in Auckland, a big part of the consenting problem is what it will do with its stormwater discharge.

In addition to discharging the coolant water, the plans show the proposed data centre had a flood channel running through it. Engineering firm Aurecon was proposing to discharge the water into the “stormwater basin” – essentially, down the drains on Fred Taylor Drive, near Westgate.

Newsroom first learned the location of that site last year, though Amazon still refuses to confirm it. We reported that plans for the new cloud computing facility involved draining a small wetland and removing a dabchick nesting site.

That’s now happened – but there’s not been much other progress. The data centre was meant to be nearing completion now, in order to open this year; instead the site sits empty and overgrown.

Asked whether the indefinite delay to storing sensitive New Zealand data in New Zealand will affect the all-of-government contract, Department of Internal Affairs general manager Richard Ashworth says: “Cloud services providers make business decisions on how they provision local services. AWS have confirmed they are still committed to building a cloud region in New Zealand.”

Ministry of Justice deputy secretary Kelvin Watson is also on-message, word-for-word: “The Ministry’s intentions have not changed,” he says. “AWS have confirmed they are still committed to building a cloud region in New Zealand.”

And Air New Zealand chief digital officer Nikhil Ravishankar emphasises that Amazon Web Services is a “key technology supplier” supporting the airline’s digitalisation ambitions. “We’ve been encouraged by their focus on making significant investments in New Zealand, including opening a data centre here. We know they remain committed to Aotearoa, and we look forward to having a regional data centre here soon.”

Last year’s Auckland Anniversary floods highlighted the vulnerability of the city’s stormwater systems, most of which are owned and managed by private landowners like Amazon.

As severe storms become more frequent and water tables rise, infrastructure experts say it’s critical these networks be well regulated. That leaves the council no choice but to ask the tough questions of developers like Amazon.

‘Significant infrastructure challenge’

Newsroom has this week been provided a copy of water regulator Taumata Arowai’s briefing to new Local Government Minister Simeon Brown.

All the other briefings from scores of government agencies were published by the start of this month; it’s perhaps illustrative of the political sensitivity around water services that it required recourse to the Official Information Act to obtain the Taumata Arowai briefing.

The regulator’s new chief executive, Allan Prangnell, previously headed the last government’s ill-fated Three Waters reforms.

In addition to regulating drinking water, Taumata Arowai took on oversight for wastewater and stormwaters, just days before October’s election. It has a national role, Prangnell explains, strengthening accountability for the performance of wastewater and stormwater services regulated by the 17 regional councils and unitary authorities.

Some of his advice is redacted, but even that which isn’t is grim reading. It identifies the enormous challenge that lies ahead of the country’s water services providers – councils, government agencies like the Defence Force and Minister of Education, and private suppliers.

From Queenstown and Clutha in the south, to the big cities of Christchurch and drought-stricken Wellington, the supply of safe drinking water poses, in some cases, “a serious risk”.

Wastewater is equally problematic. Three out of five of the country’s ageing wastewater treatment plants require reconsenting in the coming decade. Some have been operating without consents for up to 20 years. “Overflows from those networks are often unreported… There is increasing sensitivity about the presence of sewage in rivers and coastal environments.”

Stormwaters bring their own problems. They’re increasingly under pressure as populations grow, the minister is warned.

Stormwater networks are complex; the Amazon consenting issue is a reminder that large parts of the networks are private.

Property owners are responsible for maintaining their own drains, gutters and stormwater pipes, but territorial authorities and transport agencies typically maintain other stormwater infrastructure and assets.

Taumata Arowai has told Brown that it plans to exercise its new power to set stormwater network environmental performance standards.

“The age of and condition of NZ’s stormwater infrastructure, together with the interdependency it has with urban streams and overland flow paths, represents a significant infrastructure challenge.”

None of this will come cheap. Ratepayers face enormous costs to get their drinking water, wastewater and stormwater services up to a safe standard. That’s why Auckland Council insists private developers like Amazon meet strict regulations.